AI Drafter 
TaxTMI 
TaxTMI 
2016 (4) TMI 734
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....essment year 2009-10. The identical issue is involved in both these appeals and both these appeals are disposed of by this common order for the sake of convenience and brevity. We would first take the appeal in ITA No. 8271/Mum/2011 for the assessment year 2008-09 as the lead appeal and our decision in ITA no. 8271/Mum/2011 for the assessment year 2008-09 shall apply mutatis mutandis to the appeal in ITA No 4969/Mum/2012 for the assessment year 2009-10. 2. The ground raised by the assessee firm in the memo of appeal filed with the Tribunal in ITA no. 8271/Mum/2011 reads as under:- "1. The learned CIT(A) erred in confirming the disallowance of Rs. 10,85,012/- on Account of Interest. 2. Your appellant further submits that....
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.... explained that the loans have been forwarded to the sister concern and the interest has not been charged because the said concern is a sick company. The assessee firm submitted that the loan was forwarded for commercial expediency out of the current account, ING Vysya Bank Ltd. and not from the overdraft. The assessee firm relied on the judgment of Hon'ble Bombay High Court in the case of CIT v. Bombay Samachar Ltd., 74 ITR 723(Bom. HC) and submitted that the interest should be allowed as all the conditions have been met as per section 36(1)(iii) of the Act. The A.O. rejected the contentions of the assessee firm holding that assessee firm has not shown any unsecured loan or over draft facility from the ING Vysya Bank in the details ....
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.... limited to Rs. 10,85,012/- by the AO vide assessment order dated 28.12.2010 passed u/s 143(3) of the Act. 4.Aggrieved by the assessment order dated 28.12.2010 passed u/s 143(3) of the Act by the AO , the assessee firm preferred an appeal before the CIT(A). 5. Before the CIT(A), the assessee firm reiterated the submission as was made before the A.O. However, the CIT(A) rejected the contentions raised before him and held that the issue in assessee firm's own case for the assessment year 2007-08 was adjudicated by his predecessor and decided against the assessee firm. Admittedly, the assessee firm has advanced interest free funds to its sister concern while at the same time it had secured and unsecured loans on which it was paying inter....
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.... to the sister concern M/s World Wide Commodities Pvt. Ltd. which has been advanced in the earlier years . The said loan amount is advanced from time to time and also received back from time to time from the said sister concern. The ld. Counsel for the assessee firm submitted that interest paid by the assessee firm on the borrowed funds has been disallowed by the Revenue which was confirmed by the CIT(A). The ld. Counsel for the assessee firm submitted that the loan was advanced to the afore-stated sister concern based upon the commercial expediency and interest was charged in the financial year 2000-01 which was later on reversed in the financial year 2003-04 as the said sister concern has become sick and is not in a position to pay the in....
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....ster concern, which is not a subsidiary company. The ld. DR relied upon the decision of the Hon'ble Supreme Court in the case of S. A. Builders reported in 288 ITR 1(SC), and contended that there is no commercial expediency in granting the afore-stated loans to sister concern. 9. We have considered the rival contention and also perused the material on record including case laws relied upon. We have observed that the assessee firm has advanced an amount of Rs. 4,86,96,890/- to its sister concern World Wide Commodities Pvt. Ltd. free of interest. There is a loan account with the said sister concern whereby loan payments have been made from time to time by the assessee firm to the said sister concern and the loan so granted were also receiv....
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....cord that the total interest amount paid by the assessee firm is Rs. 10,85,011/- which include the interest paid for car loan for which there is a specific and dedicated borrowings for buying a car. The assessee firm has taken a plea that the sister concern has become a sick company , however, no such evidence/cogent material to this effect has been brought on record. In our considered view and in the interest of justice, the matter needs to be set aside to the file of A.O. for re-determination of the issue de-novo after considering the cogent material/evidences of the assessee firm to be brought on record by the AO to prove its contentions that the interest free funds have been advanced by the assessee firm to the sister concern of the ass....